SOUTHPORT, Conn.--(BUSINESS WIRE)-- Sturm, Ruger & Company, Inc. (NYSE:RGR) announced today that for 2017 the Company reported net sales of $522.3 million and diluted earnings of $2.91 per share, compared with net sales of $664.3 million and diluted earnings of $4.59 per share in 2016.

For the fourth quarter of 2017, net sales were $118.2 million and diluted earnings were $0.59 per share. The recently enacted “Tax Cuts and Jobs Act” positively impacted earnings by $0.03 per share. For the corresponding period in 2016, net sales were $161.8 million and diluted earnings were $1.10 per share.

The Company also announced today that its Board of Directors declared a dividend of 23¢ per share for the fourth quarter, for shareholders of record as of March 15, 2018, payable on March 30, 2018. This dividend varies every quarter because the Company pays a percentage of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income.

Chief Executive Officer Christopher J. Killoy made the following observations related to the Company’s 2017 results:

In 2017, net sales decreased 21% and earnings per share decreased 37% from 2016. The decrease in earnings is attributable to the sales decline and the unfavorable de-leveraging of fixed manufacturing costs due to the decline in production volumes.

The estimated sell-through of the Company’s products from the independent distributors to retailers decreased 17% in 2017 from 2016. For the same period, the National Instant Criminal Background Check System background checks (as adjusted by the National Shooting Sports Foundation) decreased 11%. The decrease in estimated sell-through of the Company’s products from the independent distributors to retailers is attributable to:

Decreased overall consumer demand in 2017 due to stronger-than-normal demand during most of 2016, likely bolstered by the political campaigns for the November 2016 elections,

Reduced purchasing by retailers in an effort to reduce their inventories and generate cash,

Aggressive price discounting and lucrative consumer rebates offered by many of our competitors, and

New products represented $137.8 million or 27% of firearms sales in 2017, compared to $192.6 million or 29% of firearms sales in 2016. New product sales include only major new products that were introduced in the past two years. In 2017, new products included the Precision Rifle, the Mark IV pistols, the LCP II pistol, and the American pistol. In December 2017, the Company introduced the Pistol Caliber Carbine, the Security-9 pistol, and the EC9s pistol. Due to the timing of these launches, these new products had only a minimal impact on the 2017 financial results.

Cash generated from operations during 2017 was $101 million. At December 31, 2017, our cash totaled $63 million. Our current ratio is 3.2 to 1 and we have no debt.

The Annual Report on Form 10-K is available on the SEC website at www.sec.gov and the Ruger website at Ruger.com/corporate. Investors are urged to read the complete Annual Report on Form 10-K to ensure that they have adequate information to make informed investment judgments.

About Sturm, Ruger

Sturm, Ruger & Co., Inc. is one of the nation’s leading manufacturers of rugged, reliable firearms for the commercial sporting market. As a full-line manufacturer of American-made firearms, Ruger offers consumers over 400 variations of more than 30 product lines. For more than 60 years, Ruger has been a model of corporate and community responsibility. Our motto, “Arms Makers for Responsible Citizens,” echoes the importance of these principles as we work hard to deliver quality and innovative firearms.

The Company may, from time to time, make forward-looking statements and projections concerning future expectations. Such statements are based on current expectations and are subject to certain qualifying risks and uncertainties, such as market demand, sales levels of firearms, anticipated castings sales and earnings, the need for external financing for operations or capital expenditures, the results of pending litigation against the Company, the impact of future firearms control and environmental legislation, and accounting estimates, any one or more of which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date such forward-looking statements are made or to reflect the occurrence of subsequent unanticipated events.

STURM, RUGER & COMPANY, INC.

Consolidated Balance Sheets

(Dollars in thousands, except per share data)

December 31,

2017

2016

Assets

Current Assets

Cash and cash equivalents

$

63,487

$

87,126

Trade receivables, net

60,082

69,442

Gross inventories

87,592

99,417

Less LIFO reserve

(45,180

)

(42,542

)

Less excess and obsolescence reserve

(2,698

)

(2,340

)

Net inventories

39,714

54,535

Prepaid expenses and other current assets

3,501

3,660

Total Current Assets

166,784

214,763

Property, Plant, and Equipment

365,013

331,639

Less allowances for depreciation

(261,218

)

(227,398

)

Net property, plant and equipment

103,795

104,241

Deferred income taxes

-

334

Other assets

13,739

27,541

Total Assets

$

284,318

$

346,879

STURM, RUGER & COMPANY, INC.

Consolidated Balance Sheets (Continued)

(Dollars in thousands, except per share data)

December 31,

2017

2016

Liabilities and Stockholders’ Equity

Current Liabilities

Trade accounts payable and accrued expenses

$

32,422

$

48,493

Product liability

729

1,733

Employee compensation and benefits

14,315

25,467

Workers’ compensation

5,211

5,200

Total Current Liabilities

52,677

80,893

Product liability

90

86

Deferred income taxes

1,402

-

Contingent liabilities

-

-

Stockholders’ Equity

Common stock, non-voting, par value $1:

Authorized shares – 50,000; none issued

Common stock, par value $1:

Authorized shares – 40,000,000

2017 – 24,092,488 issued,

17,427,090 outstanding

2016 – 24,034,201 issued,

18,688,511 outstanding

24,092

24,034

Additional paid-in capital

28,329

27,211

Retained earnings

321,323

293,400

Less: Treasury stock – at cost

2017 – 6,665,398 shares

2016 – 5,345,690 shares

(143,595

)

(78,745

)

Total Stockholders’ Equity

230,149

265,900

Total Liabilities and Stockholders’ Equity

$

284,318

$

346,879

STURM, RUGER & COMPANY, INC.

Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

Year ended December 31,

2017

2016

2015

Net firearms sales

$

517,701

$

658,433

$

544,850

Net castings sales

4,555

5,895

6,244

Total net sales

522,256

664,328

551,094

Cost of products sold

368,248

444,774

378,934

Gross profit

154,008

219,554

172,160

Operating Expenses:

Selling

49,232

56,146

49,864

General and administrative

28,396

29,004

27,864

Other operating income, net

31

(5

)

(113

)

Total operating expenses

77,659

85,145

77,615

Operating income

76,349

134,409

94,545

Other income:

Royalty income

506

1,142

1,084

Interest income

27

14

5

Interest expense

(152

)

(186

)

(156

)

Other income, net

916

542

622

Total other income, net

1,297

1,512

1,555

Income before income taxes

77,646

135,921

96,100

Income taxes

25,504

48,449

33,974

Net income and comprehensive income

$

52,142

$

87,472

$

62,126

Basic Earnings Per Share

$

2.94

$

4.62

$

3.32

Diluted Earnings Per Share

$

2.91

$

4.59

$

3.21

Cash Dividends Per Share

$

1.36

$

1.73

$

1.10

STURM, RUGER & COMPANY, INC.

Consolidated Statements of Cash Flows

(In thousands)

Year ended December 31,

2017

2016

2015

Operating Activities

Net income

$

52,142

$

87,472

$

62,126

Adjustments to reconcile net income to cash provided by operating activities:

In an effort to provide investors with additional information regarding its results, the Company refers to various United States generally accepted accounting principles (“GAAP”) financial measures and one non-GAAP financial measure, EBITDA, which management believes provides useful information to investors. This non-GAAP measure may not be comparable to similarly titled measures being disclosed by other companies. In addition, the Company believes that the non-GAAP financial measure should be considered in addition to, and not in lieu of, GAAP financial measures. The Company believes that EBITDA is useful to understanding its operating results and the ongoing performance of its underlying business, as EBITDA provides information on the Company’s ability to meet its capital expenditure and working capital requirements, and is also an indicator of profitability. The Company believes that this reporting provides better transparency and comparability to its operating results. The Company uses both GAAP and non-GAAP financial measures to evaluate the Company’s financial performance.

Non-GAAP Reconciliation – EBITDA

EBITDA

(Unaudited, dollars in thousands)

Year ended December 31,

2017

2016

Net income

$

52,142

$

87,472

Income tax expense

25,504

48,449

Depreciation and amortization expense

34,264

35,355

Interest expense

152

186

Interest income

(27

)

(14

)

EBITDA

$

112,035

$

171,448

EBITDAis defined as earnings before interest, taxes, and depreciation and amortization. The Company calculates this by adding the amount of interest expense, income tax expense and depreciation and amortization expenses that have been deducted from net income back into net income, and subtracting the amount of interest income that was included in net income from net income to arrive at EBITDA. The Company’s EBITDA calculation also excludes any one-time non-cash, non-operating expense.